Challenge to His Integrity, Isolation in White House Blamed : Reagan Slow to Realize Extent of Crisis

Not until President Reagan returned to the calm of his Santa Barbara mountaintop ranch on Thanksgiving weekend and listened to warnings from some of his oldest friends did he realize that the fast-spreading Iranian arms-and-hostages scandal threatened to cripple his presidency.

“Until then, he did not fathom how very, very serious and threatening it was to him and to the presidency,” said a source with intimate knowledge of the crisis as it unfolded here and in California.

Instead of viewing the problem with the dispassionate political instincts that have served him well in the past, Reagan before his Thanksgiving vacation boiled with uncharacteristic bitterness at what he saw as media exaggeration and the failure of his fellow Republicans to rally round their leader.

As described by several close advisers, including a senior Administration official, who agreed to be interviewed on condition that they not be identified, Reagan’s difficulty in grasping the scope of the crisis engulfing his Administration had three major elements:

--Perhaps more than anything in his long career, the arms-and-hostages furor involved explicit challenges to Reagan’s personal credibility and judgment. As such, it was particularly difficult for him to assess objectively.

“Never has Ronald Reagan’s own integrity and credibility been put so directly and forcibly on the line. And never has his judgment been so seriously questioned. That has made it difficult for him to take this with the same equanimity that he has in past crises,” said one Reagan adviser.

--So long as the President remained in the White House, a protective screen thrown up around him by Chief of Staff Donald T. Regan stymied other advisers, especially some of Reagan’s longtime confidants, who sought to counter Regan’s view that the crisis could be managed by hanging tough.

“The President’s handling of this whole fiasco has been perhaps the most awkward response he has ever had to a major crisis, and Don Regan is part of the problem,” said an adviser who believes Regan’s impulse to hang tough did not serve the chief executive well in his hour of need.

--The President’s intense personal feelings about some of the individuals most directly involved made it painful for him to take drastic action, especially in the cases of National Security Council aide Oliver T. North and Regan.

“Firing Ollie was a particular problem for Reagan,” a White House aide said. “Ollie’s a patriot and really courageous, and the President really likes him, admires him, has a bond of affection for him. So letting him go was difficult.”

Strong ties also bind Reagan to his chief of staff, whom many presidential advisers still want removed. At 69, Regan is one of the 75-year-old President’s few peers in the White House and a man with whom he has developed a comfortable working relationship.

Reagan Seen Sharing Blame

Neither Regan nor any of his closest aides were available for comment, but even some of their critics among the President’s advisers concede that significant blame for the way the crisis surged out of control lies with the President himself.

“Regan could be reflecting Reagan in a lot of this and probably is,” said a White House aide. “The President wouldn’t admit making a mistake because he didn’t think he had made one. And remember that he overruled (Secretary of State George P.) Shultz and (Secretary of Defense Caspar W.) Weinberger in giving the go-ahead for the sale of arms to Iran.”

Nonetheless, critics contend that any White House chief of staff must act as a restraining influence when the President takes an extreme position on important matters, and Regan failed to do so.

“There was no one there to advise Reagan and help him get out front on this thing and promise full disclosure,” one adviser said.

Saw Clark and Smith

And several sources suggested that until some of Reagan’s longtime California friends saw him at his ranch over the weekend--including former Atty. Gen. William French Smith and former National Security Adviser William P. Clark--Regan had managed to neutralize much of the outside advice given the President.

A former senior Reagan aide, who retains close ties to the White House, said the President “is so sequestered in the White House that he’s told what Don Regan wants him to be told and that’s it.”

After the Iranian arms deal first surfaced in a Beirut magazine four weeks ago, some of Reagan’s White House aides say, they realized immediately that shipping arms to a terrorist state could cause enormous political problems for the President and suggested he would fare better politically if he admitted he had made a mistake.

Regan and the President rejected that strategy, opting instead for the approach used after the collapse of the Iceland summit meeting with Soviet leader Mikhail S. Gorbachev.

Aides Defended Policy

While the President remained secluded in the White House, Regan and then-National Security Adviser John M. Poindexter began a series of press briefings to defend the Iranian policy even though it was being severely criticized by Republican leaders in Congress.

Regan, who had helped lead the media campaign that portrayed Reykjavik as a success, astounded the President’s political advisers by suggesting that the Iranian fiasco could be turned into a success simply by manipulating the media.

In an interview with the New York Times on the Iranian arms deal, Regan said: “Some of us are like a shovel brigade that follow a parade down Main Street cleaning up. We took Reykjavik and turned what was really a sour situation into something that turned out pretty well.

“Who was it that took this disinformation thing and managed to turn it? Who was it took on this loss in the Senate and pointed out a few facts and managed to pull that? I don’t say we’ll be able to do it four times in a row, but . . . .”

Clamoring for a Shake-up

Other White House officials privately scoffed at Regan’s views and Republicans in Congress began to clamor for a shake-up of the White House staff and the ouster of Regan.

Sen. Paul Laxalt (R-Nev.), general chairman of the Republican Party and Reagan’s campaign chairman in 1980 and 1984, reportedly advised the President prior to his Nov. 19 press conference that he should admit the Iranian arms deal was a mistake, but Reagan sided with Regan and contended it was not a mistake.

It was not until Reagan flew west to his ranch that the balance shifted.

“It had dragged on for almost a month, and he needed to get out in front of it to avoid the appearance of a cover-up,” one adviser said. “When a President faces a crisis, he needs to have his guiding principles in line early. One reason Richard Nixon foundered on Watergate was that, if there was a guiding principle, it was ‘we could stonewall, we can cover it up.’ ”

The President’s advisers told him that, to avoid any appearance of cover-up, he needed to support the naming of an independent counsel to take over the criminal investigation of the case from his good friend, Atty. Gen. Edwin Meese III.

They urged also that he shake up his Cabinet and White House staff and fire Regan for giving him poor advice and generally failing to protect his interests.

After Reagan’s sessions with his old friends at the ranch, the President still was in no mood to fire Regan; but he returned to Washington on Sunday determined to move quickly and decisively to pledge full disclosure, propose an independent counsel and promise full cooperation with congressional investigations, sources said.

The President was so eager to announce his moves that he considered going on television Monday, but he delayed the appearance until Tuesday in order to be able to announce also that former Pentagon official Frank C. Carlucci was his choice to succeed Poindexter, who resigned because of his part in the secret arms operation.

After the President returned to Washington Sunday, Regan called a senior staff meeting at the White House that lasted for 1 1/2 hours. At the meeting, aides pointed out that the Sunday Los Angeles Times had reported that Meese had decided to ask for an independent counsel, and they urged that this be announced officially as soon as possible.

“Does anybody here think we’re not going to have an independent prosecutor?” asked one aide, and they all agreed that, for political if not legal reasons, Meese would have to apply for an independent counsel.

“We knew we had to go for that regardless of whether there was any evidence laws had been violated,” a senior aide said, “because otherwise people would not believe the Administration.”

Further Damage Feared

The President’s action Tuesday, some Reagan aides believe, may have been at least the beginning of a turning point in his effort to restore his credibility, but they are concerned that additional disclosures stemming from the investigations could further damage Reagan’s image.

“We hope Tuesday was the beginning of a turning point,” a senior White House aide said. “But we’re in the dark as to whether there are several other explosions out there to go off. Several have gone off since the initial disclosure. And we’re preparing for a series of revelations because this thing could go on for weeks or even months with all the investigative units looking into it and the enormous resources of the media running down all the leads.”

Reagan’s long-time advisers have not been willing to be quoted on their efforts to help him deal with the Iranian arms crisis. In addition to Smith and Clark, two other California associates--businessman Holmes Tuttle and political consultant Stuart K. Spencer--also have advised him on the matter. At least two other advisers--Laxalt and pollster Richard B. Wirthlin--have conferred with him by telephone and met with him in Washington.